Hedge Funds

Exclusive - South Africa's Capitalworks to launch London hedge fund business: sources

LONDON (Reuters) - South African private equity firm Capitalworks plans to launch a London-based business to provide financial and operational support for hedge funds, four sources with direct knowledge of the matter told Reuters.

The new venture, Sephira Investment Advisors, marks the first major foray into Britain for Capitalworks, one of the biggest South Africa-based private equity firms, with $515 million (£389.97 million) of assets under management.

It comes at a time of relatively subdued growth outlooks across African markets and as Britain - the world’s second-biggest centre for asset management - faces uncertainty around the impact of Britain’s vote to leave the European Union.

Regulatory filings in Britain showed two funds registered to Sephira Investment Advisors, comprising Sephira GEM Equity and Sephira EM Asia Equity.

Capitalworks will provide a regulatory platform for the funds, help fundraise, particularly in South Africa, and inject some cash from its underlying investors, many of whom are South African, two of the sources said.

A spokeswoman at Capitalworks declined to comment.

The global emerging markets stock-picking hedge fund Sephira GEM Equity fund will be run by Jason Mitra and would likely launch in October with between $200 million and $250 million, two of the sources said.

Mitra formerly worked at Carrhae Capital and Moore Capital Management, showed filings.

Jan De Bruijn, who previously held roles at Aberdeen Asset Management and Threadneedle Asset Management, is associated with the Sephira EM Asia Equity fund, filings showed.

The two sources said the Sephira EM Asia Equity fund will take a long-only approach to investing in Asian emerging markets and will launch after Mitra’s fund with about $100 million.

Mitra and De Bruijn did not respond to requests for comment.

Capitalworks’ private equity and venture capital funds currently focus on South Africa and sub-Saharan Africa, its website says, and is among the leaders in South Africa’s $4.6 billion private equity industry, according to research firm Preqin.

Its Private Equity Funds I and II were among the 10 largest South Africa-based private equity funds launched over the last 10 years.

The continent’s two biggest economies, South Africa and Nigeria, both sank into recession this year, and despite showing signs of recovery, the pace of growth is slow.

Reporting by Maiya Keidan and Ed Cropley; Editing by Greg Mahlich